Lufthansa seeks to avert pilot strike

NataliaDrozdiak

Deutsche Lufthansa AG said Monday it continues to seek new talks with its pilots union to avert collective action, after the union said over the weekend it could strike at any time in a dispute over retirement benefits.

"Lufthansa is ready to continue negotiations at any time--we want to find common solutions with the unions," the airline's board member for human resources and legal affairs, Bettina Volkens, said at a news conference.

An imminent strike by the pilots union, Vereinigung Cockpit, would be the fourth union strike this year to hit the German flag-carrier, which already has had to slash its full-year operating profit outlook because of losses stemming from employee protests. Various trade unions have staged protests about wages, working conditions, benefits and the use of temporary employees, some of which are measures Lufthansa is implementing as part of its cost-cutting program. Through the program dubbed Score, the airline has cut thousands of jobs and aims to slash operating costs by EUR1.5 billion ($2 billion) by 2015. A three-day pilot strike in April, which grounded 3,800 flights, cost the airline EUR60 million in operating profit.

The current dispute deals with transitional retirement benefits, with Vereinigung Cockpit at odds with the airline's plan to raise the early retirement age. Under current rules, pilots can retire and already receive 60% of their wages as of age 55, the age at which pilots were previously required to retire. Lufthansa said the retirement benefit rule was outdated now that pilots can fly until the age of 65.

Lufthansa's Ms. Volkens said she was baffled Vereinigung Cockpit dropped the talks, given that ongoing negotiations were "constructive." She said Lufthansa already has made several offers but was waiting on a counterproposal.

Lufthansa has proposed either raising the individual early retirement age to 60, increasing the collective average retirement age to 61 from 58, or absolving the airline from paying for early retirement for future employees. The airline currently doesn't offer any transitional retirement payments to employees hired after Jan. 1.

The union hit back saying it wants uniform transitional payment rules for all its pilots and it still wasn't satisfied with Lufthansa's proposals.

"As soon as Lufthansa presents a new, negotiable offer, then VC will pick up talks with them again, but not before," said Markus Wahl, a union spokesman. The union added, however, there may be some leeway to the transitional payment rules but it would want to clarify that with Lufthansa at the negotiating table.

Vereinigung Cockpit represents between 85% and 90% of the 5,400 pilots who fly for Lufthansa, its cargo unit and budget operator Germanwings. The union said it would announce any strikes the day before they take place.

"A long strike could endanger the full-year earnings target and again burden the company's reputation," said DZ Bank analyst Dirk Schlamp.

The airline said it also wants to set a deadline for the negotiations and if no solution is reached before that time, then it will solicit a formal mediator. But Lufthansa said it would have to decide on that deadline with the pilots union.

Lufthansa's stock has lost more than 40% of its value since the beginning of June when the airline issued its profit warning.

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